   Chapter 12, Problem 19AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Solve the following exercises by using tables.Lucky Strike, a bowling alley, purchased new equipment from Brunswick in the amount of $850,000. Brunswick is allowing Lucky Strike to amortize the cost of the equipment with monthly payments over 2 years at 12% interest. What equal monthly payments will be required to amortize this loan? To determine To calculate: The amount of monthly loan payments required to pay Brunswick for the purchase of new equipment by Lucky Strike where payment frequency is 1 month, time duration is 2 years, nominal rate of return is 12% and present value amount is$850,000.

Explanation

Given Information:

Payment frequency is 1 month, time duration is 2 years, nominal rate of return is 12% and present value amount is $850,000. Formula used: The formula to compute the loan payment is, Amortization payment=Original amount of obligationPresent value table factor Calculation: Consider that payment frequency is 1 month, time duration is 2 years, nominal rate of return is 12% and present value amount is$850,000.

The rate period is 1%(12%÷12 period per year).

The number of periods is 24(2 years×12 period per year)

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